These marijuana companies may seek an acquisition.

Competition in the marijuana market is surging thanks to the legalization of the recreational use of cannabis in October 2018 in Canada, and the growing number of U.S. states that have approved its medical and recreational usage. With these developments, more companies are looking to acquire smaller competitors to stay ahead of the pack.

Canadian and U.S. companies will seek deals or partnerships as the industry heats up, says Jason Spatafora, co-founder of Marijuanastocks.com and a Miami-based trader and investor. "You're going to see some acquisitions. It's really about survival. You can't go it alone as a late-stage company at this point," he says. Here are seven marijuana companies that could seek acquisitions soon.

AbbVie (ticker: ABBV)

AbbVie, a Chicago-based biopharmaceutical company that was founded in 2013 after being spun off from Abbott Laboratories, could acquire companies, such as GW Pharmaceuticals (GWPH), Insys Therapeutics (INSY), Zynerba Pharmaceuticals (ZYNE) and Cara Therapeutics (CARA), to boost its pipeline of drugs, Spatafora says. "AbbVie could buy Insys, which has been hammered for their drug, Syndros, which is complementary to what they are doing," he says. "AbbVie could take out all four companies in one shot and still have tons of money left over." AbbVie offers a 5 percent dividend and reported $28 billion in revenue in 2017.

Green Growth Brands

Green Growth Brands, a Toronto-based dispensary company that trades on the Canadian Securities Exchange, made a hostile all-stock bid in December 2018 against Aphria (APHA). Green Growth Brands wants to acquire the Canadian-licensed producer because the company has "great value and not much risk," says Peter Horvath, CEO of Green Growth Brands. Whether the deal with Aphria closes or falls apart, Green Growth Brands plans to be acquisitive in 2019. "There is going to be consolidation in the industry," he says. "You will see us in deal situations because scaling a company gives you the ability to do things, but we are not going to overpay. Everyone is doing deals."

The Green Organic Dutchman

The Green Organic Dutchman, an organic cannabis producer, began trading on the Toronto Stock Exchange in May 2018 after raising 132.26 million Canadian dollars ($99.15 million) from its initial public offering. This company could be acquisitive because it has "a ton of cash, doesn't need to raise any money and hasn't made any crazy acquisitions that have an overhang and will bite an investor," Spatafora says. The Green Organic Dutchman began construction of four facilities with a total capacity of 195,000 kilograms in Canada, Europe and the Caribbean. The grower also plans to build a 40,000-square-foot research and development center that will have space to develop new products, such as cannabinoid-infused beverages.

Aurora Cannabis (ACB)

Aurora Cannabis, one of the largest licensed medical cannabis producers in Canada, will continue to seek more deals, Spatafora says. The company acquired privately held Whistler Medical Marijuana in an all-stock deal for CA$175 million in January 2019. The company itself could be a candidate, he says. "If I had to put my money on the next company, it would be Aurora, not a clear takeout, but a joint venture since their balance sheet is a little messy with all their acquisitions," he says. Aurora Cannabis, which has sales and operations in 22 countries across five continents, also holds a stake in several companies, including a 17.6 percent stake in The Green Organic Dutchman.

Liberty Health Sciences

Liberty Health Sciences, an Alachua, Florida-based medical cannabis dispensary company, could be acquiring companies to bolster its footprint, says Michael Berger, founder of Technical420, a Miami-based company that conducts research on pot stocks. The company has been "executing on a major expansion in Florida and has been focused on opportunities in Ohio and Massachusetts" and could seek more deals along the East Coast, he says. Liberty Health operates seven dispensaries in Florida and is a "really undervalued play on the U.S. market," Berger says. The company operates a state-of-the-art facility in central Florida. "We are favorable on the company's ability to expand into new markets and take significant market share," he says.